Gautam Adani seems to have lost his fortune. After climbing his way to the top as the 3rd richest man in the world in August 2022, a series of reports by short-selling firm, The Hindenburg Group, wiped a significant chunk of his fortune off the board. At the center of Hindenburg’s allegations against Gautam Adani was a network of Mauritian shell companies, which the group alleges was controlled by his brother Vinod Adani.
In addition to questions from Hindenburg, questions regarding the nature of Adani’s affiliates were raised in the Indian parliament, with opposition leaders demanding more transparency from Adani and asking him to disclose more details about the companies in Mauritius. However, the systems in place that allowed such foreign companies to have an influence on India have been in place for the last 20 years.
Foreign Direct Investment or FDI as it’s more popularly known has been a common refrain in the Indian economy. In the early 90s, the immediate aftermath of the liberalization of the economy saw many excited at the prospect of India opening up its economy to foreign investors. At the time, India had a pre-existing tax agreement with the tiny island, which reduced the already low tax rate from fifteen to effectively three percent. This tax rate, coupled with the ease of setting up companies has meant that until 2018, Mauritius was the prime destination for visitors wanting to invest into India.
